US Economy 2015: Dow-Dupont Merger Could Have Large Impact In Michigan, Experts Say

The Dow Chemical Co. logo is shown on a building in Midland, Michigan, home of the firm’s corporate headquarters, Dec. 10, 2015. Photo: Bill Pugliano/Getty Images

Detroit, pictured in February, has struggled to find a replacement for the once-booming auto industry. The merger of two large chemical companies that employ thousands of people will affect the state's economy in 2016. Photo: Getty Images

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The merger of two large chemical companies, Michigan-based Dow Chemical Co. and Delaware-based Dupont Chemical Co., will have a large impact on Michigan's state economy, Crain's Detroit Business reported Sunday. Dow Chemical is one of the largest employers in the state, and experts differed on whether the merger would affect the economy positively or negatively.

Dow was originally a bleach manufacturer, founded in 1890. In the more than 100 years since the company opened its doors, Dow has become an integral part of the Midland, Michigan, economy, employing 6,000 people in the state and serving as the largest employer in Midland.

"Dow has a lot of capital expenditures in Michigan, so there definitely could be consolidation of manufacturing facilities and they could, in principle, combine headquarters elsewhere," David Jaffe, a special situations lawyer, told Crain's Detroit Business. "But Dow has always remained strong with its commitment to Midland, and it's not like Wilmington is a storybook place to recruit talent," he added.

Michigan’s economy, particularly in its capital, Detroit, was once a booming center of the U.S. automobile industry, employing thousands of people in factories at industry giants like Cadillac and Ford. The downsizing and overseas outsourcing of the auto industry led to a collapse of the city’s economy, coming to a peak during a worldwide recession in 2008.

The state has slowly looked to recover, and in the past five years, 450,000 new jobs were created. In spring 2015, 60 percent of residents rated their economic situation as good or excellent, according to a report released by Michigan State University.

“Although the state’s economy has made big strides in the past six years, the losses of the first decade of this century were huge and continue to resonate,” said Charles Ballard, economics professor and director of the Michigan State University survey.